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Guide on the Treatment of Insolvent Micro and Small Enterprises in Asia (April 2022)

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The Guide on the Treatment of Insolvent Micro and Small Enterprises in Asia (MSE Guide) is produced under the Asian Principles of Business Restructuring project jointly undertaken by the Asian Business Law Institute and the International Insolvency Institute. It is the first published guide that will collectively form the Asian Principles of Business Restructuring. 

The MSE Guide has 65 pages. 


Micro and small enterprises (MSEs) represent the vast majority of businesses in all jurisdictions
in Asia. Despite the economic relevance of MSEs and the importance of the insolvency process,
most Asian jurisdictions do not have insolvency frameworks that are suitable for MSEs. The
COVID-19 pandemic has further exacerbated the woes of these businesses.

The MSE Guide is thus prepared with a view of seeking to provide a set of principles or policy
recommendations for the implementation of an efficient and effective insolvency framework
for MSEs in Asia. These principles or policy recommendations include five Key Principles
suggested for more immediate adoption by jurisdictions that seek to implement an attractive insolvency
framework for MSEs, and six Aspirational Principles that should ideally be
adopted over time to provide MSEs with a comprehensive legal and institutional environment
to deal with financial distress.

In the preparation of the MSE Guide, current academic literature, as well as the principles and
policy recommendations suggested by international organisations, including international
standard-setters such as UNCITRAL and the World Bank, have been taken into consideration to
achieve better alignment. As the MSE Guide focuses specifically on Asia which has unique and
region-specific features, however, some of the general principles and policy recommendations
suggested in existing international literature have been further developed, emphasised or fine-tuned in this Guide.

It is hoped that the MSE Guide will provide valuable references to policymakers and other
stakeholders alike in Asia as they work towards developing suitable insolvency frameworks for

Principles for the Design of an Effective and Efficient Insolvency Regime for MSEs in Asia

Key Principles

Key Principle 1: Promote Out-of-Court Restructuring for Viable MSEs

Key Principle 2: Implement a Simplified Insolvency Process for MSEs

Key Principle 3: Provide a Discharge of Debts for Honest but Unfortunate Entrepreneurs

Key Principle 4: Reduce the Stigma of Insolvency Proceedings

Key Principle 5: Build up Training and Institutional Capacity

Aspirational Principles

Aspirational Principle 1: Implement Hybrid Procedures

Aspirational Principle 2: Grant Tax Incentives for Debt Restructurings

Aspirational Principle 3: Promote Mediation and Other Forms of Alternative Dispute Resolution

Aspirational Principle 4: Involve Public Creditors in Restructurings

Aspirational Principle 5: Promote Litigation Funding

Aspirational Principle 6: Create a Public Agency for Managing Simplified Processes for MSEs
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